State owes $8.1B on unpaid loan

Federal funds used in pandemic on unemployment insurance claims

On Friday, state Comptroller Thomas P. Dinapoli issued a report revealing that New York owes the federal government $8.1 billion after taking out a loan from the federal Unemployment Trust Fund that was used to support unemployment insurance claims, which rose during the pandemic.

The state began borrowing money in May 2020 once its unemployment insurance reserves couldn’t keep up with the number of claims. Other states did the same.

According to the Comptroller’s office, New York is one of seven states or territories that have yet to repay their debt. The state previously made a dent in the debt, which was as high as $10.2 billion in March 2021, the report explained.

After a stream of payments, the debt dropped to $8.1 billion last month. If the debt isn’t entirely repaid by November, interest costs are set to mount — as will the federal portion of employers’ 2022 tax bill.

The federal unemployment insurance tax rate would also increase, leading employees to pay an additional $21 in yearly tax payments. If the debt goes unpaid until January 2023, that added cost would rise to $42 per employee.

In a written statement,

Justin Wilcox, executive director of Upstate United, an advocacy coalition made up of business and trade organizations from across upstate New York, said, “The findings of Comptroller Dinapoli’s updated Unemployment Insurance report are extremely alarming.

“New York’s unemployment insurance crisis will continue to hurt employers and consumers at the worst possible time,” he said. “Millions of families who are already being squeezed by historic inflation rates will ultimately pick up the tab for New York’s remaining $8.1 billion debt to Washington.”

Federal pandemic legislation limited the interest due on New York’s advance to date. The unemployment rate has steadily recovered since the pandemic.

New York has added over 1.5 million jobs since April 2020, the report stated, meaning that it recovered over 77 percent of the jobs that had been lost. At its peak, the state’s unemployment rate had been 16.5 percent in May 2020.

Most recently, the rate has declined to 4.5 percent. As the crisis abated, unemployment insurance claims decreased.

“New York’s unemployment insurance crisis will continue to hurt employers and consumers at the worst possible time.”

— Justin Wilcox, executive director of Upstate United